Gift cards have been around since the beginning of the twentieth century and their popularity has virtually exploded since entering the electronic age. A gift card is a restricted monetary equivalent that is typically issued by a retailer to be used as an alternative to a non-monetary gift. Banks also issue gift cards. Gift cards have become increasingly popular since they relieve the donor of selecting a specific gift. Gift cards have ranked as the second-most given gift by consumers in the United States and as the most-wanted gift by women. In 2006 about $80 billion were paid for gift cards in the United States. When used within the restrictions set by the issuing entity, the gift card can be used the same as cash at the discretion of the user. Retailers have gradually used gift cards to replace gift certificate programs in their retail business operations.
Gift cards today typically resemble credit cards in size and appearance. These gift cards usually display a specific theme identifying them with the issuing entity such as a retailer and are identified by a specific number or code, but usually not with an individual name. Thus, the cards can be readily transferred from individual to individual. The cards may have a barcode or magnetic strip which is readable by an electronic credit card machine and some gift cards can be reloaded by payment and can thus be used multiple times. Usually, the cards having an electronically readable identification have no value until sold at which time the cashier enters the monetary value, which a customer wishes to put on the card. This monetary value is rarely stored on the card, but rather is cross-linked in a master database to the card identification. To counteract attempts at counterfeiting a card, the data on the card is encrypted. Other gift cards may have a set value and prior to use need to be activated by calling a specific phone number.
A new trend in gift cards is the use of mobile and virtual gift cards. These cards are delivered to mobile phones via SMS messages and applications resident on smart phones thus permitting users to carry only their cell phones eliminating the need to carry a physical card which can be prone to damage or loss and eliminate the need to drive to a ‘brick and mortar’ location to purchase the gift card.
One disadvantage of using a gift card is that purchase totals rarely match the programmed value of the gift card. Thus, a user who possessed a gift card will typically makes a purchase that is less than the value of the card, trying to use as much of the value of the card as possible without spending more than the programmed value to avoid having to pay additional cost. However, the retailer or merchant that issues the card usually desires that the value of the user's purchase exceeds the value of the card to increase the volume of sales from a gift card user. However, there is no ready incentive for a user to make purchases in excess of a gift card value. Therefore, a need for a gift card system and method of using a gift card incentivizing a user to make retail purchases in excess of the value of a gift card.